Hermes raises growth target after first-half earnings beat estimates

French luxury maison HERMES raised this year’s sales-growth target after first-half earnings beat estimates on Asian demand for luxury products. The maker of Birkin and Kelly bags’ annual sales growth excluding currency shifts “could be around 12 percent,” it said today in a statement. The Paris-based company last month said it targeted annual revenue growth of 10 percent. Hermes operating profit rose 22% as China demand boosts Asia.

Operating income climbed to 510.9 million euros from 418.1 million euros a year ago, higher than the 502 million euro average of three analysts’ estimates. Hermes, in which rival LVMH Moet Hennessy Louis Vuitton SA owns a 22.3 percent stake, said sales in Asia excluding Japan rose 25 percent, “led by China, Singapore and Hong Kong”. Net income rose 15 percent to 335.1 million euros, beating the 320.7 million euro average of three analyst estimates compiled by Bloomberg.

Operating margin for the year should be between that achieved in 2010 and 2011, the company said. Hermes last month reported second-quarter sales rose 22 percent to 814.5 million euros, exceeding the 799.3 million-euro average of three analysts’ estimates compiled by Bloomberg.

Hermes made about 47 percent of sales in Asia in the second quarter, with 35 percent coming from Europe and 16 percent from the Americas.

Sales of discretionary goods in China will grow by a compounded annual rate of 13.4 percent between 2010 and 2020 to reach $1.88 trillion as shoppers in the world’s second-largest economy become more affluent, according to data in a McKinsey & Co. report in March.